The Wall Street Journal recently reported that EV manufacturer Lucid (NASDAQ:LCID) has plans to raise the prices of its vehicles beginning in June. The news that rivals Tesla (NASDAQ:TSLA) and Rivian (NASDAQ:RIVN) have also raised prices does little to soften the blow to consumers. LCID stock opened on May 10 at $17.27.
The company’s flagship Lucid Air sedan comes in multiple configurations. The company announced that, based on configuration, prices will increase between 11% and 13% when the changes are enacted in June. Consumers who reserved their vehicles for purchase prior to that date will still have their earlier prices honored.
Lucid has chosen to enact the price hikes based on multiple supply chain difficulties. It has cited problems in sourcing products, particularly glass and carpet for its vehicles. In addition, the company also cites factory shutdowns in China due to Covid-19 as another issue.
On the one hand, market followers can sympathize with the issues the company is facing. But on the other hand, business is business. As a result, LCID shares fell roughly 7% following the news.
One bright spot among the announcement is that Lucid’s losses have narrowed significantly. The company recorded a net loss in the January-to-March period of $81.3 million. That compares very favorably to the $2.9 billion loss that the company recorded in the same period a year prior.
But it’s unlikely to sway investor sentiment in a positive direction. For one, Lucid has already invested heavily to begin its manufacturing operations. That investment contributed heavily to its losses earlier. So investors are unlikely to be particularly impressed by significantly improved losses.
The real takeaway here is that Lucid Air sedans, which were already very expensive, are becoming significantly more so.
The short-term remains bleak for LCID stock. The stock’s share price has already declined from over $40 to below $20 year-to-date. In the long term, things look much more positive. The company has increased its ties with Saudi Arabia. The Middle Eastern nation will purchase 100,000 vehicles from Lucid over a 10-year period. Further, there are plans to create a facility in Saudi Arabia to produce up to 150,000 Lucid vehicles annually.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.